Forging a new Mittelstand compromise : lobbying strategies and business influence after the financial crisis

Abstract

How did business interests succeed in influencing the post-crisis financial sector reform agenda? The present article draws on a remarkable instance of lobbying success in the process of reforming the Capital Requirements Directive (CRD4-CRR), which regulates banking within the European Union. Business lobbyists from Germany, supported by representatives from other countries, obtained a more favourable regulatory treatment of bank lending to small- and medium-sized corporations (SMEs) compared to the stipulations of the internationally agreed upon Basel III framework. An in-depth study of the formation of this new so-called SME compromise shows that existing approaches, which either highlight the special role of business in shaping public policies or the constraining effects of increased political salience and the politicisation of an issue cannot account for the dynamics of business influence in the case in question. Whereas an inside evidence-based strategy of influence failed, lobbying was successful because business representatives actively increased the salience of the issue through an outside lobbying strategy.